Refinance Gone Haywire Leaves Virginia Couple Facing Foreclosure As Payoff Proceeds From Now-Defunct Lender Fail To Reach Existing Mortgage Holder

In Amelia County, Virginia, the Richmond Times Dispatch reports:

• Terry and Donna Hunt have never missed a mortgage payment. But their original lender has tried to foreclose on their house in Amelia County three times.

• The Hunts weren't involved in a loan modification, nor were they trying to take equity out of their house. Rather, things went awry when they refinanced their $211,000 mortgage in October 2009 to lower their interest rate from 7.8 percent to 5 percent. Now, no one knows who owns the loan, said Jason Krumbein, the couple's attorney.

• The new loan servicer, a government-approved lender that took over the refinanced loan from the originator, says it owns the loan, Krumbein said. But CitiMortgage, the original lender, claims it never received the payoff from Lend America, once one of the largest originators of mortgages backed by the Federal Housing Administration but now banned by the FHA from doing business.

***

• Jay Speer, an attorney with the Virginia Poverty Law Center, said that since hearing a few weeks ago about the Hunts' situation, he has been alerted to a few more cases in Virginia involving Lend America not paying off previous loans. "It's a big can of worms," Speer said.(1)

For more, see Amelia couple faces a refinancing gone bad.

(1) Reportedly, the Hunts would later learn that Lend America abruptly ceased operations within weeks after it closed on their refinance. The U.S. Attorney for the Eastern District of New York had filed a complaint in federal court, accusing Lend America of fraudulent lending practices that compromised the integrity of the FHA mortgage insurance program and contributed to increases in loan defaults and foreclosures, the story states.